1Suppose a condo generates $11,000 in cash flows in the first year. If the cash flows grow at 1% per year, the interest rate is 10%, and the building will be torn down in 15 years (the building is worthless after 15 years), what is the most you would pay for the condo today?

2Suppose instead,the building will be sold at the end of 15 years for $70,000, Using $88,253.4 as the present value of the rental cash flows, what is the most you would be willing to pay for the condo today?

3An investment promises to pay you $2,000 per year forever with the first payment in 6 years. If alternative investments of similar risk earn 7% per year, determine the maximum you would be willing to pay for this investment.

4A car dealer offers you a car loan with payments of 11,000, annually, for 3 years. If the posted APR on the loan is 4%, what is the cost of the car?